In the earlier period of the development of loop source TEM, circular loop was commonly used to approximately simulate the rectangular loop. In order to study the effect of this approximate calculation, the authors analyzed the bias caused by the approximation of rectangular loop with circular loop in this paper. According to the induced electromotive force formula of circular loop and rectangular loop at arbitrary point inside or outside the loop, the response distribution of the two loops was investigated. The results demonstrate that, at the early stage of diffusive field, large difference is caused by the approximation, while at the late stage, relatively small difference is brought out, which can be explained by the theory of smoke ring. Theoretical modeling indicates that the simulation of rectangular loop by circular loop will bring about some errors and lower the detection precision.